One of the most important issues that prospective home buyers should be aware of as they look to purchase a home is the condition of the local real estate market in their area. By understanding the different economic trends that a real estate market can be in, the potential home buyer will be able to purchase a home at a price that is beneficial to them. While economic cycles affect home buying in various ways, one of the biggest influences on the price of a home is supply and demand in the local real estate market. Supply and demand is a basic economic principle by which the price of a product is influenced positively or negatively by the availability of the product. Consequently, if there is high demand for a product with low supply, the price of this product will increase due to market conditions that will support a higher price. However, if the demand for a product with a high supply is low, the price of this product will decrease due to market conditions influenced by the high availability of this product. By applying this principle of supply and demand to buying a home, it's easy to see how purchasing a home during a time of high availability and low demand will mean you can purchase a home at a lower price. This is especially true when comparing asking prices of homes to a time when local real estate market conditions have a low supply of homes for sale but a high demand for people wanting to live in the area. The different supply and demand points in an area will have a large influence on the asking price of homes for sale. They will also impact a number of other important financial aspects of buying and owning a home. There are several ways in which supply and demand change in a given area. Although the real estate market is considered one of the most stable sectors in the United States of America with a strong growth trend, as evident by the fact that home prices have never decreased nationwide in a single year since World War II, There are certain events that will affect supply and demand in local real estate markets. National financial trends have an important influence on local real estate market conditions. During periods of economic downturn, supply and demand conditions will generally improve from the perspective of a potential home buyer.